Oil has fallen by about seven dollars a barrel since mid-February, and although OPEC countries have limited production, there could be lower prices ahead.
Even as the Saudis are now talking about extending production cuts beyond June, the oversupply coming off winter could see crude back under $40 per barrel in the second quarter of this year.
That’s according to noted Canadian oil analyst Josef Schachter.
With OPEC and major suppliers like Russia facing increasing budgetary deficits, and the U.S. increasing shale oil production to record levels, it will take a massive move by OPEC to stem the tide of overflowing supply in the months to come.
And as cheating is historically rampant by OPEC members, the further downward slide in prices could again prove a huge negative for Canada and the Canadian dollar, as historically happened when oil prices give way.